Tanzer v. International Gen. Industries, Inc.

Delaware Court of Chancery · 1979 · Corporations

402 A.2d 382 (1979)

Updated August 22, 2026

CorporationsFreeze-out mergersEntire fairnessSummary judgmentparent-subsidiary mergerfreeze-outcash-out mergerintrinsic fairness

Facts

I.G.I. owned 81% of Kliklok and all of KLK, then caused Kliklok to merge into KLK so that I.G.I. would become Kliklok's sole owner; the proxy statement disclosed that the principal reason for the merger was to facilitate I.G.I.'s future long-term debt financing. Dillon Read studied Kliklok and recommended $11 per share as a fair and equitable cash price for the minority shares, which represented a 29% premium over the closing market price just before announcement and exceeded recent market highs. The proxy statement disclosed the merger terms, I.G.I.'s control, the assured approval of the merger, and appraisal rights under Delaware law. More than 50% of the minority shares outstanding voted in favor of the merger, and almost 90% of the minority shares actually voted approved it.

Issue

After remand for entire fairness review of a parent-controlled cash-out merger, can the case be decided on summary judgment where the material facts are undisputed, and if so, was this merger entirely fair to the minority stockholders? Also, where does the burden of proof lie in this case?

Rule

When the Delaware Supreme Court requires judicial scrutiny for entire fairness in a parent-controlled merger, the burden of proof is on the defendants to show intrinsic fairness as to all aspects of the transaction. A fairness hearing does not necessarily require a trial; summary judgment is proper if the record shows no genuine dispute of material fact and the undisputed facts establish that the transaction was entirely fair. Entire fairness requires consideration of all terms and relevant circumstances, not just price, and appraisal rights alone do not satisfy the fiduciary duty though they may be considered as one factor.

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Summit Alloy Holdings owns 83% of Riverbend Robotics, a Delaware corporation based in Columbus, Ohio, and all of a newly formed affiliate that will merge with Riverbend. After extensive discovery, the record shows a detailed banker’s fairness report, accurate proxy disclosures, a cash price well above recent market trading, and no affidavits or other evidence from minority shareholders contradicting any material fact.

If minority shareholders argue that the court must hold a full trial because the merger is subject to entire-fairness review, how should the court rule?

Explanation. A fairness hearing does not automatically require a trial. Where discovery is complete, the facts are undisputed, and the record is sufficient to assess the transaction’s intrinsic or entire fairness, summary judgment is proper. Entire fairness requires scrutiny of all aspects of the transaction, not just price.